Tax Fraud Blotter: Here comes the bribe
Justice done; Invented numbers; gone fishing; and other highlights of recent tax cases.
Alexandria, Virginia: Tax policy lobbyist and former employee of the Justice Department’s Tax Division James F. Miller, 67, has pleaded guilty to filing a false return.
According to court documents, Miller underreported his gross income on his 2010 through 2014 returns by some $2,215,587. He filed multiple false federal tax returns that omitted substantial portions of the partnership income he received from two law firms he worked at and the gross receipts of his own lobbying firm.
Tax loss resulting from Miller’s conduct totaled some $735,933. He faces a maximum of three years in prison when sentenced on Sept. 27. He agreed to pay $735,933 in restitution to the IRS.
Shawnee, Kansas: Former preparer Geoffrey Rotich has been sentenced to two years in prison for preparing a false return and making a false bankruptcy declaration.
According to court documents, Rotich owned and operated the prep business Inventax and for tax years 2010 through 2012 filed at least 40 fraudulent individual income tax returns to increase the claimed refunds for himself or his clients. He also filed a fraudulent bankruptcy petition that failed to disclose his interest in Inventax and to fully identify all of his bank accounts.
Rotich was also ordered to serve two years of supervised release and to pay $86,523 in restitution to the IRS.
Dallas: Area preparer Mario Melendez has been sentenced to 51 months in prison for conspiring to defraud the U.S. and aiding and assisting in the preparation of false returns.
According to court documents and information provided to the court, Melendez worked as a manager and preparer at Uptown Multi Services. Co-defendant Francisco Ventura owned Uptown and other prep businesses. From November 2013 through April 2014, Melendez conspired with others to prepare fraudulent federal income tax returns for clients that included false education credits, Schedule C expenses and other such items. Melendez also assisted Ventura during training classes for preparers by instructing employees how to prepare fraudulent returns to inflate refunds.
Tax loss was estimated at $3.8 million to the U.S. Melendez was also ordered to serve a year of supervised release and to pay $3,885,456 in restitution to the IRS. Ventura pleaded guilty to aiding and assisting in the preparation of a false return.
Berlin, Connecticut: Preparer Gelin Sterling, 31, has pleaded guilty to one count of aiding in the preparation of false returns.
According to court documents and statements in court, Sterling owned and operated the prep business Sterling Tax Plus and for the tax years from 2014 through 2017 prepared returns for numerous clients that included false mileage expenses, false charitable donations and other false income items.
Sentencing is Aug. 5, when Sterling faces a maximum of three years. He has agreed to pay $250,000 in restitution to the IRS. As a result of his fraud, many of his clients’ filed returns will need to be amended; Sterling’s restitution may be reduced as his clients resolve their own federal tax liability.
Hope, Rhode Island: Fisherman Billie Schofield, who failed to pay hundreds of thousands of dollars in federal income taxes, has pleaded guilty to tax evasion.
According to court documents, from 2005 through 2016 Schofield worked for local fishing companies and earned hundreds of thousands of dollars. He evaded taxes by causing payments to be made through a nominee business and depositing money in a nominee account. He also filed false income tax returns, preventing the delivery of IRS levy notices to his employer and sending bogus checks to the IRS in an attempt to pay off a lien on his property. Tax loss exceeded $250,000.
Sentencing is Sept. 13, when he faces a maximum of five years in prison for the tax evasion, as well as supervised release, restitution and monetary penalties.
Alta Loma, California: Mohammad R. Tirmazi, 50, a public official in Los Angeles County’s Internal Services Department and the electrical contractor from whom he accepted nearly $300,000 in bribes have both agreed to plead guilty to bribery and tax charges.
Tirmazi agreed to plead guilty to accepting bribes and subscribing to a false 2016 return in which he failed to report $192,800 in income, including approximately $137,400 in bribes. In a second plea agreement, the contractor — Enrique Contreras, 38, of Palmdale, California — agreed to plead guilty to paying bribes and subscribing to a false 2015 return in which he failed to report $281,422 in income.
According to court documents, from 2014 to 2016, Tirmazi accepted nearly $300,000 in bribe payments from Contreras, the owner of a low-voltage electrical wiring company, Tel-Pro Voice & Data, that performed work for the county. In exchange, Tirmazi approved change orders requested by Contreras for, among other things, work that did not occur and materials that were not used on projects.
Tirmazi formed TEQ Solutions to conceal bribe payments from Contreras, court filings state. Contreras, who bribed Tirmazi with cash and gifts, also paid Tirmazi with checks made payable to TEQ Solutions that were disguised to look like payment for legitimate services. Tirmazi’s plea further states that to hide his ownership of TEQ Solutions, he used a third party to file the business paperwork and open a bank account. He issued sham 1099s to make it appear as though other individuals had received income from TEQ Solutions for work performed.
Tirmazi admitted that he failed to report on his returns for years 2014 to 2016 a total of $355,107. Contreras, in his plea agreement, admitted that he failed to report $636,454 of income he received from 2013 to 2017 as a result of his improper deduction of bribe payments and other personal expenses. He also admitted to bribing two county officials.
From approximately 2013 to 2016, Contreras made cash payments to Thomas J. Shepos, 69, of Palmdale, a public official formerly employed by the County in the Real Estate Division, totaling $200,000 to $300,000 in exchange for Shepos providing non-public county information to Contreras and helping Contreras secure county contracts.
Tirmazi and Contreras each face a maximum of 13 years in prison.
Bridgeport, Connecticut: Preparer Rolando Russell, 62, has pleaded guilty to preparing false returns for clients.
According to court documents and statements in court, Russell prepared some 1,820 federal returns for the tax years from 2013 through 2016 through a prep practice he operated. The returns claimed approximately $11.26 million in refunds, of which the IRS issued approximately $10 million. Investigation revealed that many of the returns included false Schedule C forms; the losses totaled some $22.2 million, resulting in a corresponding reduction of taxes owed of up to $6.2 million.
Russell pleaded guilty to two counts of aiding and assisting the filing of a false return, an offense that carries a maximum term of imprisonment of three years on each count. He also agreed that losses suffered by the IRS totaled some $1.5 million. Sentencing is Aug. 7.
Enola, Pennsylvania: Biofuel corporation co-owners Ben T. Wootton and Race A. Miner, the latter of Buena Vista, Colorado, have been found guilty of one count of conspiracy to make false statements to the Environmental Protection Agency, six counts of making false statements to the EPA, one count of conspiracy to defraud the IRS and one count of aiding and assisting in the filing of a false claim with the IRS. A jury also found the corporation, Keystone Biofuels Inc., guilty of conspiring to make false statements to the EPA and six counts of making false statements to the EPA.
According to the evidence, Wootton and Miner co-owned and operated Keystone, which purported to be a producer and seller of biodiesel, a type of renewable fuel. From August 2009 through September 2013, Wootton and Miner conspired to fraudulently generate renewable fuel credits, identified by renewable identification numbers on Keystone fuel and, through January 2012, to fraudulently claim refunds based on the Biodiesel Mixture Tax Credit. Wootton and Miner also reported inflated fuel amounts to the IRS to support fraudulent claims for refunds on fuel Keystone was not producing, among other schemes.
Tax loss totaled some $4,149,983.41.
Wootton and Miner face a maximum of five years in prison on each conspiracy count and on each false statement to the EPA count, and three years in prison on the count of filing a false tax claim with the IRS, as well as supervised release, restitution and monetary penalties.